NAFTA: 20 Years of Broken Promises

A Wall Street Journal writer, a trade representative and a Congressman walk into a Denver pot store and the clerk says, "What is this, a joke?"

The writer says, “I know I really shouldn’t, but I just NAFTA!”

In reality, WSJ writer Mary Anastasia O'Grady wrote about the 20th anniversary of the North American Free Trade Agreement (NAFTA): “A continental web of supply chains now supports production facilities and serves consumers in three countries with a combined population of 470 million.”

Bill Knight

Of course, it IS the WALL STREET Journal, so presenting a 1% perspective isn’t shocking. Nevertheless, when she wrote, “Those who predicted that NAFTA would lead to joblessness and poverty have been proven definitively wrong,” someone must’ve thought, “What’s she smoking?”

Leo W. Gerard, International President of the United Steelworkers union, says NAFTA “made Wall Street happy. It made multi-national corporations obscenely profitable. But it destroyed the lives of hundreds of thousands of American workers.”

Indeed, in a new study, "NAFTA at 20," Public Citizen's Global Trade Watch lists actual outcomes important to everyday people: “NAFTA was fundamentally different than past trade agreements in that it was only partially about trade,” the report shows. “NAFTA created new privileges and protections for foreign investors that incentivized the off-shoring of investment and jobs by eliminating many of the risks normally associated with moving production to low-wage countries. In 1993, NAFTA was sold to the U.S. public with grand promises. Twenty years later, the grand promises made by NAFTA’s proponents remain unfulfilled. Many outcomes are exactly the opposite of what was promised.”

Today, the pending Trans Pacific Partnership (TPP) is more of the same, as the Obama administration seeks to expand NAFTA’s model to 11 Asian and Latin American countries through TPP.

Gerard says, “They were – and still are – brutally wrong. There is no evidence the TPP would be any different. Corporate politicians [such as] U.S. Rep. Dave Camp [R-Mich.] and Sens. Orrin Hatch [R-Utah) and Max Baucus [D-Mt.] introduced legislation to speed passage of TPP – put it on the fast track. The fast track bill empowers the president to sign a secretly devised trade pact before Congress votes on it [and] limits Congressional debate to 20 hours and forbids amendments.”

That’s how NAFTA went through. Corporations and former Presidents George H.W. Bush, a Republican, and Bill Clinton, a corporate-cozy Democrat, said NAFTA would "create 200,000 jobs in this country by 1995 alone." Instead, it resulted in a loss of jobs of between 845,000 (as government made that number eligible for Trade Adjustment Assistance help) and 1 million (according to the Economic Policy Institute, measuring through 2004).

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Bill Knight's January 23 radio commentary

Wages worsened, too. As corporations rushed to exploit Mexico's low wages, Americans saw downward pressure on pay. Two out of three displaced manufacturing workers who got new jobs in 2012 did at reduced wages, said the U.S. Bureau of Labor Statistics, which determined that most took a cut of more than 20%.

NAFTA’s side agreement on labor standards failed, too, according to a Communications Workers of America study, “A Broken Record of Broken Promises.” Forced labor in industrial and agricultural sectors persisted in Mexico, where there also was no enforcement of child-labor laws, the U.S. State Department conceded. Labor rights and working conditions have eroded in the United States, too. Intimidation is twice as likely when workers organize, and employer threats to close during unionization went from 29% to 57%.

Trade itself suffered. In 1993, the United States had a $1.6 billion trade surplus with Mexico. In 2012, the trade deficit was $62 billion.

Government authority is jeopardized, too. Corporate “tribunals” can overrule laws on labor rights, environmental regulations, job safety and any issues that supposedly inhibit projected corporate profits, and can fine these violators of trade pacts.

Understandably, public opinion went from skepticism to opposition. Gerard says, “Americans know in their guts the damage NAFTA did to them. Americans want trade deals to ensure equity. They want trade policies that increase American innovation, American manufacturing and American jobs.”